Upaid sues Telstra over patent infringement

A litigious mobile commerce patent holder based in a tax haven is taking Telstra to court over infringements of its intellectual property. It is doing the same thing in Japan.

Upaid Systems says it is the holder of “original patents over certain enabling technologies for mobile commerce,” and has issued proceedings in the Australian Federal Court against Telstra, alleging that the telco giant has infringed two of its Australian patents.

Upaid, based in the technology powerhouse of the British Virgin Islands, alleges that Telstra is charging customers who are registered on its 3G network when those customers use overseas roaming to acquire goods and services from Telstra or third party merchants through Telstra’s BigPond portal.

It also alleges Telstra uses Upaid’s intellectual property rights without permission in selling a variety of mobile commerce services to its prepaid customers. Upaid’s CEO and founder Simon Joyce says he invented the technology that allows mobile phone users to conduct business with a large number of merchants.

“The technology overcomes the limitations otherwise imposed upon consumers by the need to limit parties to those whose computer systems are tightly integrated with a particular telecommunications company,” he said.

Joyce, who founded Upaid in 1997, said the company has been granted patents in more than 30 countries for a number of mobile commerce technologies, including over the air top-up and prepaid and postpaid mobile services. He said Upaid has successfully fended off attacks on its patents in the US and UK.

“In the UK the attacking party lost on first instance and appeal. Its application for further appeal to the House of Lords was denied. In the US the challengers sought to limit their liability by challenging the validity as well as the breadth and meaning of all of the key claim terms. In the end the opposing party settled and admitted to the media that they compensated Upaid with US$70 million.”

Joyce is no stranger to legal action. In 2005 he sued Qualcom and Verizon Wireless in the US, but the case was dismissed after it was determined that Indian tech giant Satyam, which Upaid had paid to develop some of the technology, was at fault.

The US$70 million case Joyce was referring to was the subsequent suit he brought againsy Satyam, which was finally settled in 2009 in a New York court. Joyce then took Satyam back to court over whether the amount included taxes or not – he lost that round.

Upaid’s s website (www.upaid.net) stresses its ‘patent portfolio’, and the lengths it will go to in enforcing its intellectual property rights, much more than its stresses its technology. “Upaid is an innovation company patenting and licensing the intellectual property it has developed in-house,” says the site. “We are searching for synergies with partners for whom our platform extends functionality of their own businesses. For these partners, Upaid provides value and indeed protection against unfair competitors. Patent exclusivity is just that: excluding those who do not own or lease the property rights.”

Upaid insists that it is not a patent troll, an uncomplimentary term used to describe companies that rely on intellectual property litigation as their main source of revenue,

“Enforcement is necessary aspect of our business is enforcement. We do not shy from that. There are companies who do not pay for what they take, even if they have no right to it. Upaid isn’t in a game of trying to levy a patent tax. We’re not into games.”

Joyce makes the point that he developed the technology Upaid has patented – he does not buy patents then litigate to protect them. He thinks he has a strong case against Telstra. “We recently attempted to initiate licensing negotiations with Telstra. We regret that we have had to resort to litigation to enforce our rights.”

The court proceedings seek orders requiring payment for past damages from Telstra and seeks injunctions restricting future infringements. Joyce said Australian Patent Office filings demonstrate that Telstra was aware of one of Upaid’s relevant patents as early as 2004. He said that the actual amount of the damages sought cannot be established without access to Telstra’s records, but the amount is expected to be material.

“Companies that build their businesses on intellectual property that they do not own or licensedo so at the peril of their shareholders,” said Joyce. “Upaid has invested a great deal in defending and enforcing its patent portfolio. As a result we are well prepared to move expeditiously and expect to prevail.”

Upaid has initiated similar action in Japan against NTT DoCoMo, the former government telecoms monopoly. It is seeking¥100 billion ($114 million).

The Australian Financial Review quotes Telstra as a saying it “respects valid intellectual property rights; indeed we are a significant rights holder ourselves.

“We are disappointed Upaid Systems has refused our offer of good faith discussions on this matter and instead has chosen to litigate. We can’t comment on matters before the courts other than to say we will exercise all our legal rights in this case.”

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Graeme Philipson is senior associate editor at iTWire and editor of sister publication CommsWire. He is also founder and Research Director of Connection Research, a market research and analysis firm specialising in the convergence of sustainable, digital and environmental technologies. He has been in the high tech industry for more than 30 years, most of that time as a market researcher, analyst and journalist. He was founding editor of MIS magazine, and is a former editor of Computerworld Australia. He was a research director for Gartner Asia Pacific and research manager for the Yankee Group Australia. He was a long time IT columnist in The Age and The Sydney Morning Herald, and is a recipient of the Kester Award for lifetime achievement in IT journalism.